Topic 3: Non-Market Strategy and International Expansion
Topic 3: Non-Market Strategy and International Expansion Bus-G 202
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This 3 page Class Notes was uploaded by Siyana Tabita on Saturday February 21, 2015. The Class Notes belongs to Bus-G 202 at Indiana University taught by Kreft in Spring2015. Since its upload, it has received 33 views. For similar materials see Business, Government, and Society in Business at Indiana University.
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Date Created: 02/21/15
6202 Topic 3 NonMarket Strategy and International Expansion Economic Profit Revenues minus all costs Revenue Price X Quantity Sold Cost Explicit costs Implicit costs Explicit costs Monetary payment ex wages paid to labor Implicit costs Involve firm s resources not monetary ex Opportunity cost of owner s investment Calculated as a normal rate of return Normal rate of return What firms could get by investing in business with similar risk Accounting Profit Revenue Implicit costs Economic Profit Revenue Implicit costs Explicit costs Opportunity Cost Normal Rate of Return f Revenue explicit cost mpicit costs 0 then Revenue Explicit costs Implicit costs Accounting profitNRR When Accounting profit gt NRR you have an advantage in the market Rational rate of return Economic profit gt 0 Revenue Explicit costs lt Implicit cost Accounting profit lt NRR should not continue Role of Entrepreneurs take risk in order to find what ventures are profitable Entrepreneur Someone who tries to exploit opportunities that exist within markets 1 Offer New products or open New markets 2 Create a Lower Cost Technology 3 Find new resources ex the submerged forest Intrepreneur An entrepreneurial individual that is employed by a firm Entrepreneurs are wanted by firms because they39re risk takers and 0199 Needed to keep ahead of rival firms Needed to improve overall efficiency An effort to keep the brightest minds within the corporation Incentive to incorporate more profitable projects Entrepreneurs are incentivized to work at firms because there are resources there job stability less risk Economic Freedom Entrepreneurs and Economic Growth There is a positive link between economic freedom and economic growth Highest with low taxes low regulation secure property and consistent legal structure Economic freedom creates an environment that is conducive to entrepreneurship The taX situation in a country regulation of business safety environmental See if there is good protection of property rights There is a positive correlation between economic growth and economic freedom Then increased entrepreneurship leads to economic growth leads to a better society business will thrive Economic Growth and Creative Destruction Creative Destruction When entrepreneurial change makes older industries or technologies become obsolete Less efficient industries die off and free resources that can go to new more efficient industries ex pager phone booth iphone Government can block creative destruction by enacting policies to protect dying industries definitely not good for the welfare of the economy Conflict of Interest When a professional individual has a private interest sufficient enough to influence the pursuit of their official duties What would you consider a professional Key elements Someone with human capital an 1 Professional expertiseskill 2 Private or Personal Interest When their opinion changes from objective to 3 Official Duty subjective Types of Conflict of Interest Self Dealing Misuse of Employer s property Use your position to secure personal benefits Personally gaining from employers property ex Rod Blagojevich who had people bribe on the without consent senate seat Using his power in a corrupt way to benefit himself Influence Peddling Use your position to secure benefits for a third party anyone who is not yourself Ex your wife is also a dentist like you and you send some people to her stops you from using an objective position Outside Employment or Moonlighting Holding multiple employment positions at one time which biases professional behavior Ex an auditor with environmental agency who also has good consulting other company you39re auditing may influence you to consult there and so you are influenced to audit them favorably 2 different jobs at once that conflict interest Accepting Benefits Receiving bribes or nonmonetary gifts Ex Receiving gifts from a company so that you will recommend them Misused of Inside information Misusing Confidential Information EX Someone telling you to buy a stock when they know insider information Post Employment Holding a sequence of employment positions where you carry a bias from one job to the next Ex Chenney who used to be the CEO of Halliburton then the Vice President but when there was a war in Iraq he used Halliburton to reconstruct war torn area People stated he only used them because he had a bias Transparency International Corruption is the abuse of entrusted power for private gain Petty Corruption Decisions made by lowlevel bureaucrats Often centered on localregional regulations licenses or discretionary spending Grand Corruption Decisions made by highlevel politicians Often centered on national policy formation infrastructure decisions military equipment procurement or allocation of subsidies Perceptions of Corruption Sand Corruption is associated with 1 Reduced GDP growth 2 Reduced foreign direct investment 3 Increased income inequality 4 A misallocation of government property It39s a bad thing for an economy People will avoid corrupt placescompanies Corruption helps to speed up commerce in an environment controlled by heavy bureaucracy and excessive regulation It could be good with a little bit of money to a low level bureaucrats can help to get some small things done faster
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